Afterpay rival Klarna to launch in Australia in 2020
The buy now pay later provider is currently the most valuable fintech in Europe.
Klarna, one of the biggest players in the burgeoning buy now pay later space, has confirmed it will launch in Australia in 2020. CEO Sebastian Siemiatkowski confirmed the company's plans to Reuters, saying that after a strong start for its service in the United States it plans to launch in Australia and other markets.
"We are on a very exciting journey from a Scandinavian payment provider to a global shopping ecosystem," Siemiatkowski said.
The announcement was not entirely surprising, as Klarna entered an exclusive partnership with CommBank in August. The partnership formed part of Klarna's US$460 million equity funding which took its valuation to US$5.5 billion and made it the largest private fintech in Europe.
Klarna launched in 2005 in Sweden and currently operates in more than 14 countries including the US and UK. When it launches in Australia it will join local rivals Afterpay, Zip and Humm. Afterpay also currently competes with Klarna in the US after its launch in mid-May 2018, as well as the UK after its launch in June this year.
Each buy now pay later provider has slightly different offerings, but are all centred around instalment plans. Klarna gives shoppers three different instalment options, Afterpay allows its users to split the cost of purchases into four equal instalments and Zip offers two products with two different credit limits.
Speaking to Reuters, Siemiatkowski says Klarna is planning to introduce new products for users and merchants, of which the latter is growing quickly.
"We are winning a new merchant every eight minutes," Siemiatkowski said. "Since the beginning of 2019 we have enlarged our merchant base by over 60,000 merchants to over 190,000 today."
When Klarna does launch in 2020 it will coincide with an investigation by the Reserve Bank of Australia (RBA) into the "no-surcharge" rule currently in place for buy now pay later providers in Australia. Currently, merchants bear the cost of offering buy now pay later services to their customers which can be between 2-6%. However, the RBA will investigate whether to change this to allow retailers to pass this surcharge onto consumers as part of its 2020 review of card payments regulation.